Understanding the Kennedy health care bill

Understanding the Kennedy health care bill

Over the weekend a draft of Senator Kennedy’s (D-MA) health care bill leaked. After playing with Adobe Acrobat, here is the text of the draft Kennedy bill as a text file (173 K), and as a single Acrobat file (3.4 MB). Update: I fixed the broken link to the PDF. Unlike the leaked version, both of these are searchable.

Calling it the “Kennedy” bill is something of an overstatement. Senator Kennedy chairs the Senate Health, Education, Labor, and Pensions committee, and his staff wrote the draft. By all reports, however, Chairman Kennedy’s health is preventing him from being heavily involved in the drafting. Senator Reid has designated Senator Chris Dodd (D-CT) to supervise the process, but as best I can tell, it’s really the Kennedy committee staff who are making most of the key decisions. For now I will call it the Kennedy-Dodd bill.

As the committee staff emphasized to the press after the leak, this is an interim draft. I assume things will move around over the next several weeks as discussions among Senators and their staffs continue. This is therefore far from a final product, but it provides a useful insight into current thinking among some key Senate Democrats.

Update: I now have a three-page outline of the House Democrats’ health care bill. I have a new post which contains all of the content below, and compares it to the House bill. If you read the new post, you’ll get two for the price of one: Understanding the House Democrats’ [and Kennedy-Dodd] health care bill[s].

Here are 15 things to know about the draft Kennedy-Dodd health bill.

    1. The Kennedy-Dodd bill would create an individual mandate requiring you to buy a “qualified” health insurance plan, as defined by the government. If you don’t have “qualified” health insurance for a given month, you will pay a new Federal tax. Incredibly, the amount and structure of this new tax is left to the discretion of the Secretaries of Treasury and Health and Human Services (HHS), whose only guidance is “to establish the minimum practicable amount that can accomplish the goal of enhancing participation in qualifying coverage (as so defined).” The new Medical Advisory Council (see #3D) could exempt classes of people from this new tax. To avoid this tax, you would have to report your health insurance information for each month of the prior year to the Secretary of HHS, along with any such other information as the Secretary may prescribe.”
    1. The bill would also create an employer mandate. Employers would have to offer insurance to their employees. Employers would have to pay at least a certain percentage (TBD) of the premium, and at least a certain dollar amount (TBD). Any employer that did not would pay a new tax. Again, the amount and structure of the tax is left to the discretion of the Secretaries of Treasury and HHS. Small employers (TBD) would be exempt.
    1. In the Kennedy-Dodd bill, the government would define a qualified plan:
        1. All health insurance would be required to have guaranteed issue and renewal, modified community rating, no exclusions for pre-existing conditions, no lifetime or annual limits on benefits, and family policies would have to cover children up to age 26.
        1. A qualified plan would have to meet one of three levels of standardized cost-sharing defined by the government, gold, silver, and bronze. Details TBD.
        1. Plans would be required to cover a list of preventive services approved by the Federal government.
        1. A qualified plan would have to cover “essential health benefits,” as defined by a new Medical Advisory Council (MAC), appointed by the Secretary of Health and Human Services. The MAC would determine what items and services are “essential benefits.” The MAC would have to include items and services in at least the following categories: ambulatory patient services, emergency services, hospitalization, maternity and new born care, medical and surgical, mental health, prescription drugs, rehab and lab services, preventive/wellness services, pediatric services, and anything else the MAC thought appropriate.
        1. The MAC would also define what “affordable and available coverage” is for different income levels, affecting who has to pay the tax if they don’t buy health insurance. The MAC’s rules would go into effect unless Congress passed a joint resolution (under a fast-track process) to turn them off.
    2. Health insurance plans could not charge higher premiums for risky behaviors: “Such rate shall not vary by health status-related factors, … or any other factor not described in paragraph (1).” Smokers, drinkers, drug users, and those in terrible physical shape would all have their premiums subsidized by the healthy.
    1. Guaranteed issue and renewal combined with modified community rating would dramatically increase premiums for the overwhelming majority of those Americans who now have private health insurance. New Jersey is the best example of health insurance mandates gone wild. In the name of protecting their citizens, premiums are extremely high to cover the cross-subsidization of those who are uninsurable.
    1. The bill would expand Medicaid to cover everyone up to 150% of poverty, with the Federal government paying all incremental costs (no State share). This means adding childless adults with income below 150% of the poverty line.
    1. People from 150% of poverty up to 500% (!!) would get their health insurance subsidized (on a sliding scale). If this were in effect in 2009, a family of four with income of $110,000 would get a small subsidy. The bill does not indicate the source of funds to finance these subsidies.
    1. People in high cost areas (e.g., New York City, Boston, South Florida, Chicago, Los Angeles) would get much bigger subsidies than those in low cost areas (e.g., much of the rest of the country, especially in rural areas). The subsidies are calculated as a percentage of the “reference premium,” which is determined based on the cost of plans sold in that particular geographic area
    1. There would be a “public plan option” of health insurance offered by the federal government. In this new government health plan, the federal government would pay health care providers Medicare rates + 10%. The +10% is clearly intended to attract short-term legislative support from medical providers. I hope they are not so naive that they think that differential would last.
    1. Group health plans with 250 or fewer members would be prohibited from self-insuring. ERISA would only be for big businesses.
    1. States would have to set up “gateways” (health insurance exchanges) to market only qualified health insurance plans. If they don’t, the Feds will set up a gateway for them.
    1. Health insurance plans in existence before the law would not have to meet the new insurance standards. This creates a weird bifurcated system and means you would (probably) be subject to a different set of rules when you change jobs.
    1. The bill does not specify what spending will be cut or what taxes will be raised to pay for the increased spending. That is presumably for the Finance Committee to determine, since it’s their jurisdiction.
    1. The bill defines an “eligible individual” as “a citizen or national of the United States or an alien lawfully admitted to the United States for permanent residence or an alien lawfully present in the United States.”
  1. The bill would create a new pot of money for state gateways to pay “navigators” to educate people about the new bill, distribute information about health plans, and help people enroll. Navigators receiving federal funds “may include … unions, …”

This would have severe effects on the more than 100 million Americans who have private health insurance today:

    • The government would mandate not only that you must buy health insurance, but what health insurance counts as “qualifying.”
    • Health insurance premiums would rise as a result of the law, meaning lower wages.
    • A government-appointed board would determine what items and services are “essential benefits” that your qualifying plan must cover.
    • You would find a tremendous new disincentive to switch jobs, because your new health insurance may be subject to the new rules and would therefore be significantly more expensive.
    • Those who keep themselves healthy would be subsidizing premiums for those with risky or unhealthy behaviors.
    • Far more than half of all Americans would be eligible for subsidies, but we have not yet been told who would pay the bill.
    • The Secretaries of Treasury and HHS would have unlimited discretion to impose new taxes on individuals and employers who do not comply with the new mandates.
  • The Secretary of HHS could mandate that you provide him or her with “any such other information as [he/she] may prescribe.”

I strongly oppose this bill.

Update: If this topic interests you, I highly recommend Jim Capretta’s blog Diagnosis.

(photo credit: kennedy.senate.gov)

383 responses

  1. The 1965 Immigration Act written by Kennedy should tell everyone that this will be a mess and screw americans!

    • How does an Act written in 1965 have any relevancy on an Bill written in 2009? Your argument is circular; you are implying that the act is faulty and then using that as support for your conclusion. What was wrong with the 1965 act and how is it relevant to 2009?

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  3. Doctors will love this plan. They will be leaving the profession in droves, leaving behind the less-than-excellent doctors. There will be hospitals in some major cities, but they will be economically unfeasable in smaller ones – for instance, the size of Kansas City.

    If anybody wonders where those doctors would go, just do a web search for “medical vacation”.

    Gary: “My wife and I placed a small wager… on the 2012 result.”

    I think you’re going to lose. By 2012 it will be too late. Look at all the damage they’ve done in only 6 months. The only way out is to start recall movements in every state where they’re available. It may already be too late.

    But let’s not be like the lobster waiting for the water to boil, hoping that maybe the fire will go out.

  4. The people have spoken, Obama (aka Dear Leader), now has the reigns of power, and he is running hell bent to drive us into full Socialism/Marxism. He has no regard to personal property, or anything even remotely related to Capitalism. Unfortunately, all of this was known and out there for all to read and understand before the election, but the vast majority of the electorate who get their daily pablum from the big three television networks or newspapers had no idea of what or who Dear Leader was before the election. This is truly sad and represents the true deterioration (dumbing down) of our electorate.

    Will this pass, most likely with minor variations, and we will have to live with it. The future of our country is the hands of extreme Socialist/Marxists, and environmentalist who are intent on reshaping the country in their vision. We have a Constitution that has already been trashed by multiple Presidents and Congresses, and the current group of leaders are bent on accelerating the conversion to Socialism.

    The big question is when will the American public, that hugh sleeping giant wake up and take corrective action on this abuse. The future will definitely be interesting.

  5. Insurance companies are running scared.

    Our time for healthcare reform is now. Let’s not be bullied by corporate interests.

    • I couldn't have said it better myself. I was telling my health insurance that I couldn't wait until Obama was President so that we could get Health Care Reform! And now, that time is finally here!

  6. USA is the only industrialized country where we do not have guaranteed healthcare for all people. USA is the only country that pays more to get less.

    I believe healthcare is a right guaranteed by our Creator. We must have compassion and empathy for all.

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  8. Pingback: Keith Hennessey on the Draft Health Care Bill…Adds Medical Advisory Council…kills self-funded plans for small business…requires ‘children’ be covered to age 26 under parents plan… « Moderate in the Middle

  9. Pingback: Keith Hennessey on the Draft Health Care Bill…Adds Medical Advisory Council…kills self-funded plans for small business…requires ‘children’ be covered to age 26 under parents plan… « Moderate in the Middle

  10. Pingback: 15 reasons to fear Kennedy & Dodd on heathcare (Kopechne and Fannie Mae are not two of them) | Daily Danet

  11. Changing payers and mandating coverage overlaid on a flawed delivery system see: http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande will only increase costs. One thing I do agree with is that pre-existing conditions are hard tease out the differences between genetics and personal choice. I don’t want a healthcare system that discriminates against someone because of their genes, that is a slippery slope. The other problem with health risk and personal behavior is that the manifestation date of illness is far removed in time from the risky pattern of behavior. Dr. Jonathan Miller once quipped about his smoking (paraphrasing), “I’m convinced that these things will eventually kill me, I’m just not convinced that this is the one that will.”

    Quoting from the bill “HEALTH PROFESSIONALS SHOULD JUDGE WHAT Is BEST FOR THEIR P ATIENTS.-Doctors, nurses, and other health professionals have the right to judge what is best for their patients.” If health professionals only did that the there would be no problem, but they do not. Standards for treatment vary widely across the country as do prices and doctors do not act in the patient’s self interest they try to maximize revenue see: http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande

    Quoting from the bill “”SEC. 2710. NO LIFETIME OR ANNUAL LIMITS.
    “A group health plan and a health insurance issuer offering group or individual health insurance coverage may not establish lifetime or annual limits on benefits for any participant or beneficiary.”

    This is probably the most importmant provision of the bill. It will eliminate the possibility of personal bankruptcy from the exhaustion of health benefits because of a serious illness. We all actually pay for this care now because those individuals who are bankrupted because of illness and loss of health benefits never repay the costs of treatment.

    This provision makes health insurance underwriting more difficult and premiums will have to rise to cover the increase in risk. Risk today is capped at about $2million lifetime per insured what this bill does is remove that cap and make risk almost unlimmitted for a health insurer. If an insurer is faced with unlimmitted risk they will exit the market. Perhaps this is an unstated goal of the bill.

    • Doctors, nurses, and other . .. . .have the right to judge what is best for their patients. . .. AMEN!!!!! I agree with this part too! But the insurance companies are the one establishing standard filing fees. NOT the doctors. So the insurance companies are the one establishing how much you are billed. (This varies with every policy and region.) You might also noted the "provider right off" that's money that truly just disappears into thin air. If the doctors are to decide then why are they to be punished if the patient has to be admitted for the same condition twice? What is the the punishment by the government for the patient who has chronic conditions because of their lifestyle (smoking, drinking, diet. . .).

      AMEN!!!! to no one going bankrupt, but lets also throw in a capitation on "pain and suffering." One of the largest cost of a practicing doctor is malpractice insurance! A good area to research this is Kansas City. It is split down the middle between Missouri and Kansas state line. Kansas has a cap and Missouri does not. Kansas side has many forms of specialists, and Missouri doesn't. Why, the doctors in Missouri can't afford the added cost of the malpractice insurance, because their patients can not afford the trickle down cost they would pay in increased fees. (Ask your doctors what they pay in malpractice.) I HATE DOCTORS THAT DON'T CARE ABOUT THEIR PATIENTS! This does not mean that if a honest doctor makes a mistake that he should be sued without civil limitations.
      I am getting windy, but in short why have the lawyers .. sorry i mean congressmen not addressed this problem? Maybe its the cut of the winnings they get from the lucrative lawsuits. By the way, its a bipartisan thing. Don't blame the other side.

      Lastly, why are they being exempt from the health care bill? I think it was amendment 28 that stated they could not right laws that did not apply equal to both congress and the public?

  12. “I believe healthcare is a right guaranteed by our Creator.”

    Hey, Guest. Would you mind showing us all what article in the US Constitution covers health care? And would you further mind sharing with us all what rights (and list them all) the Creator has garunteed us all? I would hate to give in to this LITTLE healthcare thing only to find there is a whole list of other RIGHTS we have to submit to in order for our CREATOR to be happy.

    By the way, is CREATOR another way of spelling Obama?

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  14. I believe life, liberty and the pursuit of happiness include the right to healthcare.

    Let’s disagree civilly, no namecalling please.

  15. I don’t see anything about malpractice protection or any restrictions on supplemental private insurance or care, which will be needed when folk find the new ‘free’ government program will not cover expensive procedures or drugs…

  16. Pingback: The American Spectator : AmSpecBlog : Kennedy Healthcare Bill Leaked

  17. This has to pass before the investment portfolios of all the doctors recover. Think about it. Accelerate the outflows of the ARRA when the economy seems to be recovering on its own (makes no sense). Pound through an ill formed new energy policy. Increase taxes everywhere. All will have dramatic downward effects on the economic recovery, which will hold thousands of doctors hostage. If the economy doesn’t recover, doctors won’t be able to retire when Obama nationalizes health care and permanently reduces their incomes. Sinister son of a gun. The only way he’ll be able to get new doctors is by letting them go to college for free. Talk about adverse selection.

    Did anybody read his book before they voted for him? He put this all on the table. The Audacity of Hope might as well have been called My Manifesto for How I’ll Wreck America, Why I Hate Conservatives and Republicans and What White People Owe My People.

  18. Start investing in South American countries!!!

    This bill is just one (but a BIG one) of the many factors that is leading up to a mass exodus of the productive elements our our society.

    The idea that people are tied to a specific location for their work is being left behind – I like many (and the number is growing rapidly) telecommute – so where I work from is not of great importance, so I’m planning on moving to Costa Rica (a wonderfull place, check it out!). As more and more of the professional workforce leaves, companies will relocate, or set up regional offices offshore. Microsoft recently stated that if the Obama tax initiatives go thru, they will be moving a hundred thousand jobs overseas – but what wasn’t said was that many of the Americans would most likely follow these jobs overseas. So not only is Obama’s policies forcing the jobs overseas – he’s forcing the productive workers overseas also! This is what is going to lead to the inevitable downfall of American society.

    I forsee a great boom in a number of countries in South/Central America as expatriates flood the region. The more the merrier in my opinion – THANKS OBAMA!!!!

    • You must be a pessimist or just a Republican who can't believe that a non-republican can actually do a good job! Go to South America, we don't need your energy or your useless words.

      The reason businesses are going oversees is because they are going broke here in the USA where health insurance is the most expensive. Any company expecting to do well has to pay for benefits for their employees. So, if they move oversees then there are no such requirements. Mere taxes are not the only factor, nor are the a significant factor because if you know anything about business you know that anyone with money uses tax shelters.

  19. Health care a right? What if we run out of enough doctors? Can you sue the govt for denying your rights?
    Liberals are very generous with other people’s money

    • Are you serious? No one is talking about suing the government because we don't have health insurance. Liberals are generous with other people's money? Don't you mean Republicans? The highest the National Debt has been since 1950 was under Reagan/ Bush (70% of GDP) until G W Bush took office and increased it to 80% of the GDP. It was Clinton who decreased the debt by 10% after his predecessors the Republicans.

      Check your facts! The money we always spend is OUR MONEY.

      You know the difference between deficit spending by Republicans and Democrats; Republicans enjoy paying for war and Democrats enjoy paying for social programs that benefit their citizens.

      • Melinda,
        The Clinton Administration had Two (2) sets of books. one that showed us how well we were doing and the real one that showed how much deeper in debt he got this wonderful nation. I suggest that you check "YOUR FACTS"!

  20. People like guest are the ones who complain about paying $40 for a vaccination that provides lifelong immunity to disease, but have no problem paying $100 to attend a Brittany Spears concert for a couple of hours. As an intensive care physician trained in the U.S., I can tell you I have my passport ready and am already looking for the best country in which to emigrate should the marxist-in-chief cram nationalized health care down our throats. Neither I nor my brothers and sisters who slaved away through 4 years of college, 4 years of medical school and 3-8 years of residency/sub-specialty training are going to sit by and allow the obamunists to literally put us into slavery. (How ironic would that be?) What good is “free” health care if you don’t have anyone qualified to perform life-saving medical interventions?

    • Here is one more idea. They don't even want the health bill for themselves!! They are going to try and keep a separate system for themselves. Even if they are stupid enough to think they can escape their own bill. NO doctor will stick around to be a GP let alone specialist to be on their separate medical policies.

      PS The number of times out of 600 congressmen (or so) that a specialist is needed is not going to even pay for the first year of undergrad . .. .money/greed that wont even save them. Which I know has to be sitting in the backs of their minds or, why would they right themselves out of such a great bill?

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